PRASANT V GADIYAR, MUMBAI V. INCOME TAX OFFICER 19(1)(1), MUMBAI

ITA 1197/MUM/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0384 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 234B; 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 1197 / MUM . /2018 ( ASSESSMENT YEAR : 20 07 08 ) SHRI PRASANT V. GADIYAR 239, VALMIKI, KHAR DANDA KHAR (W), MUMBAI 400 052 PAN AELPG7901F . APPELLANT V/S INCOME TAX OFFICER WARD 22 (2) (5) , MUMBAI . RESPONDENT ASSESSEE BY : SHRI VIMAL PUNMIYA REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 1 2 .09.2018 DATE OF ORDER 19.09.2018 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 2 8 TH DECEMBER 2017 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 3 4 , MUMBAI, FOR THE ASSESSMENT YEAR 20 07 08 . 2 . GROUNDS NO.1 AND 2 ARE NOT PRESSED, HENCE, DISMISSED. 3 . IN GROUND NO.3, THE ASSESSEE HAS CHALLENGED ADDITION OF ` 1,54,968, AS INCOME FROM BUSINESS AS AGAINST CLAIM OF SHORT TERM CAPITAL GAIN. 2 SHRI PRASANT V. GADIYAR 4 . BRIEF FACTS ARE, THE ASSESSEE AN INDIVIDUAL FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 18 TH JULY 2 007, DECLARING TOTAL INCOME OF ` 4,46,379. INITIALLY, THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED AS A RESULT OF SEARCH AND SEIZURE OPERATION CONDUCTED IN CASE OF MAHASAGAR SECURITIES PVT. LTD. ON 25 TH NOVEMBER 2009, REVEALING THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY MAHASAGAR SECURITIES PVT. LTD. AND M/S. ALLIANCE INTERMEDIARIES AND NETWORK P VT. LTD., RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN OF ` 1,54,968 TOWARDS SALE OF SHARES FOR A CONSIDERATION OF ` 22,44,439. HOWEVER, AS PER THE AIR INFORMATION AVAILABLE ON RECORD, THE SHARE TRANSACTION CARRIED OUT THROUGH ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. WAS FOUND TO BE NON GENUINE. ACCORDINGLY, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE A SSESSEE TO EXPLAIN WHY THE LONG TERM CAPITAL GAIN OF ` 10,79,077, CLAIMED BY THE ASSESSEE AS EXEMPT UNDER SECTION 10(38) OF THE ACT SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT. THOUGH, THE ASSESSEE OBJECTED TO THE PROPOSED ADDITION, HOWEVER, THE ASSES SING OFFICER REJECTING THE OBJECTIONS OF THE ASSESSEE TREATED THE AMOUNT OF ` 10,79,077 AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED OF 3 SHRI PRASANT V. GADIYAR SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY. 5 . THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE FOUND THAT THE AIR INFORMATION PERTAINED TO ASSESSMENT YEAR 2007 08 AND SUCH INFORMATION RELATED ONLY TO PURCHASE OF SHARES, THEREFORE, HE D ELETED THE ADDITION OF ` 10,79,077, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALE OF SHARES ON THE BASIS OF VERY SAME AIR INFORMATION. HOWEVER, AS REGARDS ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN OF ` 1,54,968 , THE LEARNED COMMISSIONER (APPEALS) HELD THAT THE SHARE TRANSACTION WHICH RESULTED IN SUCH CAPITAL GAIN IS NOT GENUINE. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ADD THE SAID AMOUNT UNDER SECTION 68 OF THE ACT. 6 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THOUGH THE ASSESSEE IS NOT DISPUTED THE QUANTUM OF ADDITION, HOWEVER, IT SHOULD BE ASSESSED AS SHORT TERM CAPITAL GAIN . 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS). 8 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. UNDISPUTEDLY, THE SHARE TRANSACTION WHICH RESULTED IN THE SO CALLED CAPITAL GAIN OF ` 1,54,968 WAS CARRIED OUT THROUGH M/S. ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD., WHICH IS IDENTIF IED AS ONE OF THE 4 SHRI PRASANT V. GADIYAR GROUP COMPANY OF MUKESH CHOKSI GROUP. AS A RESULT OF INFORMATION FOUND DURING THE SEARCH AND SEIZURE OPERATION CONDUCTED IN CASE OF MUKESH CHOKSI AND ITS GROUP COMPANIES, IT WAS FOUND THAT THEY WERE PROVIDING ACCOMMODATION ENTRIES THROUGH VARIOUS PERSONS / ENTITIES WITHOUT ANY ACTUAL SHARE TRANSACTION. THEREFORE, ASSESSEES CLAIM THAT THE SHARE TRANSACTIONS ARE GENUINE IS UNACCEPTABLE. MOREOVER, FROM THE DISCUSSIONS OF THE LEARNED COMMISSIONER (APPEALS) IT S PATENT AND OBVIOUS THAT THE SO CALLED SHARE TRANSACTION RESULTING IN GAIN OF ` 1,54,968, WAS WITHOUT ANY MONETARY CONSIDERATION AS NEITHER THE ASSESSEE PAID ANY AMOUNT TO THE BROKER NOR IT RECEIVED ANY AMOUNT FROM THE BROKER ON SALE OF SHARES. THEREFORE, ASSESSEES CLAIM ON SHORT TERM C APITAL GAIN IS A COOKED UP STORY WITHOUT ANY BASIS. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS). GROUND RAISED IS DISMISSED. 9 . GROUND NO.4, IS AGAINST INITIATION OF PROCEEDINGS UNDER SECTION 271( 1)(C) OF THE ACT. 10 . THE ISSUE RAISED IN THIS GROUND BEING PRE MATURE AT THIS STAGE DOES NOT REQUIRE ADJUDICATION. 11 . IN GROUND NO.5, ASSESSEE HAS CHALLENGED LEVY OF INTEREST UNDER VARIOUS PROVISIONS. 5 SHRI PRASANT V. GADIYAR 12 . LEVY OF INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT BEING MANDATORY AND CONSEQUENTIAL, THE ASSESSING OFFICER HAS TO LEVY INTEREST IN ACCORDANCE WITH STATUTORY MANDATE. SUFFICE TO SAY, INTEREST CHARGEABLE UNDER SECTION 234C OF THE ACT SHOULD BE ON THE BASIS OF INCOME RETURNED BY THE ASSESSEE. 13 . GROUND NO.6, BEING GENERAL IN NATURE NOT REQUIRED TO BE ADJUDICATED. 14 . IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.09.2018 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 19.09.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI